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Class Year

2017

Abstract

The purpose of this paper is to study the effects of specific airline business decisions on aircraft accident propensity. Airline safety affects everyone and has large regulatory and policy implications. Existing research has focused largely on three areas: airline financial health, safety and the resulting effects of accidents. I use both Poisson and Negative Binomial models to study two different airline features: low-cost carriers and flight length, and how they relate to the probability of an aircraft accident. Based on results using a Generalized Negative Binomial model, I find statistically significant evidence at the 99% confidence level that a 1-unit increase in the flight length leads to a 0.11% decrease in the number of accidents. I also find statistically significant evidence at the 99% confidence level that when an airline is classified as a low-cost carrier, the number of accidents decreases by 79.16%. These results indicate that a homogenous safety regulation framework is not appropriate for the airline industry with regard to flight length and cost structure.

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